Power bills remain unchanged despite the heavy El NiAo rains

The heavy El NiAo rains have failed to register a positive effect on power bills as the fuel levy remain unchanged despite rising levels of water for hydro-electricity.

Data from the Energy Regulatory Commission (ERC) indicates that the fuel levy, which is linked to the amount of power generated from expensive diesel, will remain at Sh2.51 per unit (kilowatt hour) in December’s electricity bills.

The heavy rains were expected to increase the share of cheap hydropower in the national generation mix and cut demand for expensive thermal power.

The official data indicates that the strengthening shilling has, however, seen the foreign exchange adjustment drop marginally to S per unit from S.06 in November and S.99 a month earlier.

This suggests power bills for December will remain almost unchanged.

Electricity prices have a direct bearing on the country’s inflation, which rose to 7.32 per cent last month from 6.72 per cent in October.

Kenya has received heavy rains from last month, expected to fill up hydroelectric dams and boost power generation.

The country relies on an energy mix of hydropower, thermal and geothermal sources. An injection of 280 megawatts of geothermal power between August and December has helped cut the share of expensive thermal power and lower bills.

READ: Forex-driven power bills hit the poor hardest despite subsidy

Geothermal power is priced at about Sh7 per unit, thermal (S9) and hydropower, the cheapest, at S.

Kenya Electricity Generating Company (KenGen) said on Wednesday that Masinga Dam � the firm’s main reservoir � was two metres short of spilling at 1,054.32 metres.

The energy regulator uses Kenya Power’s data from the previous month to guide its next review of fuel cost levy � which takes up the largest share of monthly variable costs in power bills � inflation charge and forex adjustments.

Forex adjustment is now a key mover of power prices among the variable items on power bills.

The shilling is trading at levels last seen in 2012 at S02 against the dollar, raising living costs in a country that largely depends on imports.

The shilling has been under pressure in recent months due to falling revenues from tourism and horticulture � key foreign exchange earners � amid rising demand for dollars from importers.

The fuel levy rose to a nine-month high of S.11 per unit in August, prompting the ERC to warn Kenya Power to revert to a cheaper power mix.

SOURCE: BUSINESS DAILY